The expected price rise in local scrap prices in the US above previous forecasts in February have given some hope to Brazilian basic pig iron (BPI) exporters for a long-awaited rebound. But, for now, the increase has not been fixed in deals and the previous sales last week showed a further drop.
Last week, a deal for a 50,000 mt cargo of Brazilian BPI with 0.15 percent phosphorus content to one of the major US importers at $410-415/mt CFR was disclosed, down from the previous deal to another US port at $418-420/mt CFR. So, in fact, after one Brazilian producer confirmed a contract at as low as $393/mt FOB, this latest deal confirms that the FOB-based price has dropped further to below $390/mt FOB.
However, this week most offers from Brazil have increased, to $400-405/mt FOB at the lowest. Moreover, a number of offers for Brazilian BPI with 0.15 percent phosphorus content have increased to $415-420/mt FOB. “The producers would like to increase and will increase prices. Currently, there is no business with the US, and we have to wait. But rumors say that exporters are aiming for plus $20/mt at least,” a trader said, commenting on the attempts of Brazilian pig iron suppliers to hike prices.
Ferrous scrap prices for February in the US Midwest are now seen settling $30-40/nt ($33-43/mt) higher amid the recent cold and snowy weather. Some said that even up to $50/mt is possible for some prime grades. “The rise in scrap in the US is important. But also, production [of pig iron] here shrank due to the shortage of charcoal. Tens of furnaces are idled,” a Brazil-based source said.
In such a situation, the ex-South Brazil BPI reference price has settled in a wide range of $390-415/mt FOB, with the midpoint at $402.5/mt FOB, increasing by $8.5/mt since last week. The price level includes both the buyers’ latest price idea as the low end and the sellers’ targets at the high end.
There is still a limited offer volume of lower phosphorus BPI to the US, but, in such conditions of higher scrap prices, Brazilian suppliers targeted above $420/mt FOB North Brazil. One deal for BPI with low phosphorus content has been confirmed at $420/mt on FOB basis this week, which translates to around $444/mt on CFR US basis. Last week the tradable level for this grade was $435/mt CFR at best. In the next round, Brazilian suppliers will try to get up to $440/mt FOB for BPI with 0.10 percent of phosphorus content.
As a result, the import BPI reference price in the US has settled at $420-444/mt CFR, up by just $5.5/mt until new deals are signed.